Written by, Kerry Keefer Fischer
Many of you have probably seen, read or heard headlines this past week about the real estate industry, a lawsuit settlement against our National Association, claims about how everything is changing, commissions are dropping, prices are dropping, a million realtors will leave the industry and more! So what is this all about? What’s the reality? Is the Sky Falling on Realtors & our industry and are agents going to be quitting?
Most of you probably realize, the media likes a bit of hype and hysteria, so I want to make sure I can be a resource for you and tell you what we do know and what we don’t know.
Essentially; our National Association of Realtors (NAR) made a proposal to settle and to try to create a win-win situation for those attempting to change the way the real estate industry works and still ensure Realtors can best serve our clients. As Realtors, when we negotiate the commission we will work as a listing agent, we also have included some level of compensation from that for the buyers agent; because that was a requirement to enter our listings on our local MLS, and a rule from our Association (which is an issue the lawsuit wanted to do away with).
As part of the settlement, NAR is no longer requiring the seller to offer compensation to the buyer’s agent; now we know that buyer representation is critical; however the group of sellers that kicked off this lawsuit wanted buyers’ to pay for their own representation. Should the seller still want to offer buyer agent compensation to incentivize a buyer; we will not be allowed to show that compensation on the MLS (which is where we post listings). So we have to now keep any compensation being offered off the MLS and provide in some other way. We can however offer concessions a seller is willing to pay on the MLS– it just can’t be tied to their agent compensation.
So when we sit down to negotiate with a seller as to the commission we will work for as a listing agent, we will with our sellers the benefit of still offering compensation to a buyer’s agent and what that could look like. If a seller decides not to offer any compensation to a buyer’s agent, then the buyer would need to afford their down payment, closing costs and paying for their agent – which the downside is, this will keep some buyers from being able to purchase your home – so perhaps you could be limiting your pool of buyer’s. This will certainly have a big impact on our Buyer’s, because those struggling with affordability already will have one more expense or opt not to have their own representation, which I have found very few buyers are savvy enough to go it alone.
Another key take away from the settlement is that NAR is requiring the Buyer’s agent to have the buyer sign a written agreement explaining what services and value are being provided and for what price…before showing homes.
In our market, we always have this agreement signed with the buyer, however it has not always been done before showing homes. Plus, in the past; as Buyer’s Agents you could see what sellers were offering Buyer Compensation in our MLS so now it will just take an extra step reaching out to the Listing Agent to find out what the seller is offering so the Buyer has an idea before seeing the home. Certainly, even if a seller doesn’t offer compensation as part of their listing a Buyer can always ask for it in their offer as part of the negotiations or choose not to pursue that home.
The biggest challenge I see is lower and middle income buyer’s will struggle affording their own representation so could make home ownership for them a bit more difficult.
The challenge I see for agents will be extra communication, extra disclosure, and strategic thinking with our clients. Yes I believe some part time and full time agents will just decide they are not comfortable and confident with change so will leave the industry; but strong agents will survive; we will adapt and continue doing our best to help our clients have smooth transactions.
Of course the proposed settlement needs court approval but the changes I mentioned will occur starting in July. I hope this shed a little more light on the headlines you are hearing about. I am always here and available to answer more of your questions. Feel free to call our team or reach out to me directly.
Contact information:
Kerry's email - kerry@keeferfischerteam.com
Keefer Fischer Team office number - 269-633-9243